ASSET PURCHASE AGREEMENT
BY AND AMONG
AMERICAN KIOSK CORPORATION,
ZERO'S MR. SUBMARINE, INC.,
AND
XXXX XXXXXXX, XXXXXX XXXXXXXX and XXXX XXXXXXX
TABLE OF CONTENTS
PAGE
THE ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . .-1-
Acquired Assets . . . . . . . . . . . . . . . . . . . . .-1-
Excluded Assets . . . . . . . . . . . . . . . . . . . . .-3-
EXCLUDED LIABILITIES.. . . . . . . . . . . . . . . . . . . . .-4-
PURCHASE PRICE . . . . . . . . . . . . . . . . . . . . . . . .-4-
Stock Consideration . . . . . . . . . . . . . . . . . . .-4-
Further Assurances. . . . . . . . . . . . . . . . . . . .-4-
REPRESENTATIONS AND WARRANTIES OF ZEROS, XS
AND THE SHAREHOLDERS. . . . . . . . . . . . . . . . . . . .-4-
Existence and Good Standing . . . . . . . . . . . . . . .-4-
Financial Statements and No Material Changes. . . . . . .-4-
Ownership of the Assets . . . . . . . . . . . . . . . . .-5-
Material Contracts. . . . . . . . . . . . . . . . . . . .-5-
Employment Agreements . . . . . . . . . . . . . . . . . .-5-
Tax Audits and Payment of Taxes . . . . . . . . . . . . .-6-
Liabilities . . . . . . . . . . . . . . . . . . . . . . .-6-
Restrictive Documents . . . . . . . . . . . . . . . . . .-6-
Litigation. . . . . . . . . . . . . . . . . . . . . . . .-6-
Inventories . . . . . . . . . . . . . . . . . . . . . . .-6-
Authorization for Agreement . . . . . . . . . . . . . . .-6-
No Misleading Statements. . . . . . . . . . . . . . . . .-7-
Brokerage . . . . . . . . . . . . . . . . . . . . . . . .-7-
Holding of Buyer's Common Stock for
Investment Purposes Only. . . . . . . . . . . . . . . . -7-
REPRESENTATIONS AND WARRANTIES OF THE BUYER. . . . . . . . . .-7-
Existence and Good Standing . . . . . . . . . . . . . . .-7-
Capital Stock of the Buyer. . . . . . . . . . . . . . . .-7-
Financial Statements and No Material Changes. . . . . . .-7-
Restrictive Documents . . . . . . . . . . . . . . . . . .-8-
Litigation. . . . . . . . . . . . . . . . . . . . . . . .-8-
Authorization for Agreement . . . . . . . . . . . . . . .-8-
No Misleading Statements. . . . . . . . . . . . . . . . .-8-
Brokerage . . . . . . . . . . . . . . . . . . . . . . . .-9-
Bankruptcy. . . . . . . . . . . . . . . . . . . . . . . .-9-
FURTHER AGREEMENTS OF THE PARTIES. . . . . . . . . . . . . . .-9-
Consent to Assignment . . . . . . . . . . . . . . . . . .-9-
Indemnification . . . . . . . . . . . . . . . . . . . . .-9-
By Zeros, XS, and the Shareholders . . . . . . . . .-9-
By the Buyer . . . . . . . . . . . . . . . . . . . -10-
Claims for Indemnity . . . . . . . . . . . . . . . -10-
Right to Defend. . . . . . . . . . . . . . . . . . -10-
Expenses. . . . . . . . . . . . . . . . . . . . . . . . -10-
Bulk Sales. . . . . . . . . . . . . . . . . . . . . . . -10-
Registration Rights . . . . . . . . . . . . . . . . . . -10-
Change of Corporate Name. . . . . . . . . . . . . . . . -11-
CONDITIONS TO OBLIGATIONS OF THE BUYER . . . . . . . . . . . -11-
Corporate Action. . . . . . . . . . . . . . . . . . . . -11-
Charter Documents and Good Standing Certificates. . . . -11-
Truth of Representations, Warranties and Schedules. . . -11-
Performance of Agreements . . . . . . . . . . . . . . . -11-
Non-Competition Agreements. . . . . . . . . . . . . . . -12-
Assignment Agreement. . . . . . . . . . . . . . . . . . -12-
Xxxx of Sale. . . . . . . . . . . . . . . . . . . . . . -12-
CONDITIONS TO OBLIGATIONS OF THE SHAREHOLDERS, XS AND ZEROS. -12-
Corporate Action. . . . . . . . . . . . . . . . . . . . -12-
Good Standing Certificate . . . . . . . . . . . . . . . -12-
Truth of Representations, Warranties and Schedules. . . -12-
Performance of Agreements . . . . . . . . . . . . . . . -12-
CONDITIONS SUBSEQUENT. . . . . . . . . . . . . . . . . . . . -13-
Landlord Consents . . . . . . . . . . . . . . . . . . . -00-
Xxxxxxxxx Xxxxxxxx Certificates . . . . . . . . . . . . -13-
MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . -13-
Notices . . . . . . . . . . . . . . . . . . . . . . . . -13-
Parties in Interest . . . . . . . . . . . . . . . . . . -14-
Entire Agreement. . . . . . . . . . . . . . . . . . . . -14-
Counterparts. . . . . . . . . . . . . . . . . . . . . . -14-
Governing Law . . . . . . . . . . . . . . . . . . . . . -14-
EXHIBITS
Description of Exhibit
Form of Non-Competition Agreement Exhibit A
Form of Assignment Agreement Exhibit B
Form of Xxxx of Sale Exhibit C
SCHEDULES
Description of Schedules
Leased Assets Schedule 1(A)(iv)
Leased Real Estate Schedule 1(A)(xiv)
Immaterial Excluded Assets Schedule 1(B)(iv)
List of Jurisdictions where Zeros Conducts Business Schedule 4(A)
Adverse Material Change in Assets Schedule 4(B)
Acquired Assets Schedule 4(C)
List of Material Contracts of Zeros Schedule 4(D)
List of Employment Agreements of Zeros Schedule 4(E)
Filing/Payment of Taxes due of Zeros Schedule 4(F)
List of Liabilities of Zeros Schedule 4(G)
Legal Proceedings of Zeros Schedule 4(I)
Financial Statements of the Buyer Schedule 5(C)
Legal Proceedings of the Buyer Schedule 5(E)
Current Franchisees Schedule 9(B)
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT ("Agreement"), is made and entered into this
8th day of December, 1999, by and among AMERICAN KIOSK CORPORATION, a
Delaware corporation (the "Buyer"), ZERO'S MR. SUBMARINE, INC., a Virginia corporation
("Zeros") and XXXX XXXXXXX, XXXXXX XXXXXXXX and XXXX XXXXXXX (collectively, the
"Shareholders"). Zeros and the Shareholders are sometime collectively referred to herein as
the "Seller."
WHEREAS, the parties hereto propose to enter into this Agreement to provide for the
acquisition of substantially all of the assets of Zeros by the Buyer; and
WHEREAS, the Buyer is authorized to issue 50,000,000 shares of common stock, $.001
par value per share, of which an aggregate of 4,237,500 will be issued and outstanding on
the Closing Date (as hereinafter defined); and
WHEREAS, the Buyer desires to acquire the assets of Zeros in exchange for shares of
Buyer's common stock in a transaction that is expected to qualify as a "tax free
reorganization" pursuant to the provisions of Section 368(a)(1)(C) of the Internal Revenue Code of 1986; and
WHEREAS, the parties desire to set forth in this Agreement certain representations,
warranties, agreements, and conditions with respect to the acquisition of the Zeros assets;
NOW, THEREFORE, in consideration of the premises and the mutual representations,
warranties, covenants and agreements herein contained, the parties hereto agree as follows:
1. THE ASSETS.
A. Acquired Assets.
Subject to the terms and conditions of this Agreement, on and as of the date hereof
(the "Closing Date"), Seller shall sell to the Buyer, and the Buyer shall purchase from Seller,
all, and not less than all, of the assets and properties of Zeros (other than the "Excluded Assets"
hereinafter defined) as set forth herein, and as same are constituted on the Closing Date
(collectively, the "Assets"). Without limiting the generality of the foregoing, the Assets shall
be comprised of all of the following:
(i) All trade accounts receivable, notes receivable and other rights to
receive payment from customers of Zeros, including therein all accrued accounts receivable
representing amounts payable in respect of products and services sold or otherwise provided
to customers of Zeros which are invoiced or billed as at or after the Closing Date (collectively,
the "Receivables"). Buyer shall remit to Zeros any payment received by it for Receivables
invoiced or billed by Zeros prior to the Closing Date. However, Buyer agrees to remit to Seller any
and all royalty payments or franchise fees received by it after the date hereof but prior to January
1, 2000, other than royalty payments or franchise fees derived from new franchisees who Seller
is currently in negotiations with as of the date hereof.
(ii) All inventories of raw materials, work-in-process, finished goods,
operating supplies and materials, factory and maintenance supplies and related inventory
items, which are owned by Zeros and used in connection with its business (collectively, the
"Inventories");
(iii) All assumable prepaid items of Zeros for which the Buyer would
receive an economic benefit following the Closing Date, and appropriately pro-rated through
the Closing Date (collectively, the "Prepaid Items");
(iv) All (i) machinery, equipment, molds, tooling, jigs, dies, measuring
and calibrating devices, automobiles and other vehicles, files, systems, furniture, fixtures,
office equipment and (subject to the terms and conditions respecting ownership thereof as provided
by the terms and conditions of any lease; and (ii) those leases of personal property listed on
Schedule 1(A)(iv) annexed hereto (the "Leased Assets");
(v) All letters patent, patent applications, trademarks, copyrights and
trade names, service marks, computers, computer equipment, computer programs, computer
software, and computer systems, library of books, records, know-how, trade secrets,
technical information, brochures and other related assets of Zeros pertaining to its business and owned
by either Zeros (collectively, the "Intellectual Property");
(vi) All customer lists, trade secrets, licenses, permits, franchises,
territorial agreements, whether or not listed on Schedules to this Agreement, and related
contract rights and other proprietary intangible assets of Zeros, whether or not confidential, and all
books, records, printouts, drawings, data, files, notes, notebooks, accounts, invoices,
correspondence and memoranda which are owned or possessed by Zeros (collectively, the "Documents and
Records");
(vii) All tools categorized as small hand tools and packaging and office
supplies owned by Zeros, whether or not expensed (collectively, the "Supplies");
(viii) All rights and benefits of Zeros under all: (i) purchase orders on
hand and customer bids and quotations; and all other contract rights, commitments and
claims of Zeros which are specified under or pursuant to all manufacturers' warranties and any licenses
or license agreements relating to any Intellectual Property used by Zeros for its business; (ii)
contracts and agreements, including orders and commitments covering the purchase of
Inventories and/or Supplies, the providing of services and/or products to customers, and agency,
consultant and distributorship agreements; and (iii) all other contracts, orders and commitments which
are not required to be scheduled pursuant to this Agreement and (in the case of such unscheduled
contracts, orders and commitments) which have been entered into by Zeros in the normal and
ordinary course of its business prior to the Closing Date and not in violation of the covenants
contained in this Agreement (collectively, the "Contract Rights");
(ix) The exclusive rights in and to the name "Zeros Mr. Submarine", and
all trade names and trademarks associated therewith, whether alone or in conjunction with
any other name or word, and all other names used by Zeros in connection with the operation of
its business as a going concern;
(x) Except as it may relate to Excluded Assets and Excluded Liabilities,
all rights, benefits and claims, including rights of indemnification, monetary relief and/or
replacement of Inventories, products or supplies, which may be asserted against any vendor,
manufacturer or supplier of Inventories, or Supplies included in the Assets;
(xi) Except for the Excluded Assets referred to in Section 1(B) hereof,
all other rights and assets tangible or intangible, of Zeros or used by Zeros in connection
with its business, except for such assets which have been disposed of in the normal and ordinary
course of the business of Zeros;
(xii) All claims, recoveries, causes of action, documents and records
relating to pending proceedings, lawsuits and claims to which Zeros is a party as of the
Closing Date and relating to Zeros, the Assets and/or to its business;
(xiii) All rights incident, directly or indirectly, to insurance policies,
proceeds, loss funds, claims, litigation and insurance accounts in connection with the Assets,
Zeros and the operation of its business prior to the Closing Date; and
(xiv) All leasehold rights, as lessee, in and to those leases of real
properties and improvements occupied or used by Zeros or any franchisee in connection with
its business as are set forth of Schedule 1(A)(xiv) annexed hereto (the "Leased Real Estate").
B. Excluded Assets.
On the Closing Date, Zeros shall retain all right, title and interest in and to, and the
Buyer shall not purchase or acquire, any of the following assets and properties of Zeros
(hereinafter, the "Excluded Assets"):
(i) all shares of capital stock and other securities, the stock books and
minute books of Zeros;
(ii) any (i) cash on hand, cash and cash equivalent items held by or on
behalf of Zeros, including without limitation checking accounts, marketable securities, bank
accounts and other cash items, (ii) the proceeds of accounts receivable including uncashed
checks in payment thereof received by Zeros invoiced or received on or prior to the Closing Date,
and (iii) related investments readily convertible into cash of Zeros (collectively, the "Cash
Items");
(iii) any real estate owned by Zeros, if any; and
(iv) Those immaterial assets, if any, whether or not used or held for use
in connection with the conduct of the business of Zeros, as agreed upon by the Buyer and
Zeros, which are specifically identified on Schedule 1(B)(iv) annexed hereto;
2. EXCLUDED LIABILITIES.
Subject to the terms and conditions of this Agreement, on and as of the Closing
Date, the Buyer shall not assume or pay, perform and discharge, as the case may be, any of
the liabilities and obligations of Zeros, whether fixed or contingent, other than liabilities arising
out of Buyer's acquisition of the Leased Assets or the Leased Real Estate.
3. PURCHASE PRICE.
A. Stock Consideration. In consideration for its purchase of the Assets and
in addition to Zeros retention of the Excluded Liabilities, the Buyer shall issue to Zeros an
aggregate of 1,500,000 shares of Buyer's Common Stock.
B. Further Assurances. From time to time from and after the Closing, the
parties shall execute and deliver, or cause to be executed and delivered, any and all such
further agreements, certificates and other instruments, and shall take or cause to be taken any and all
such further action, as any of the parties may reasonably deem necessary or desirable in order to
carry out the intent and purposes of this Agreement, including the preparation and filing of any and
all documents with the Securities and Exchange Commission relating to the acquisition of Zeros
by the Buyer or otherwise relating to the business of Zeros.
4. REPRESENTATIONS AND WARRANTIES OF ZEROS AND THE
SHAREHOLDERS. Zeros and the Shareholders do hereby jointly and severally represent
and warrant to the Buyer as follows:
A. Existence and Good Standing. Zeros is a corporation duly organized,
validly existing, and in good standing under the laws of the State of Virginia; has the
requisite corporate power and authority to own property and to conduct business as now being
conducted; and is duly qualified to carry on its business and is in good standing in the jurisdictions
indicated on Schedule 4(A) attached hereto, which Schedule 4(A) lists all of the jurisdictions in which
Zeros conducts business, and the nature of the business conducted.
B. Financial Statements and No Material Changes. Zeros has heretofore
furnished the Buyer with a balance sheet of Zeros as of December 31, 1998 and June 30,
1999 and related statements of income and cash flows for the periods then ended (the "Financial
Statements"). Such Financial Statements, including the footnotes thereto, have been prepared
in accordance with principles consistently followed throughout the periods indicated. Such
balance sheet fairly presents the financial condition of Zeros as of the date thereof and reflects all
claims against, and all debts and liabilities of Zeros, whether fixed, contingent, or otherwise, as of
the date thereof, and such statements of income fairly present the results of the operations of
Zeros for the period indicated. Such Financial Statements, including the footnotes thereto, do not
contain any untrue statements of a material fact or omit any material fact necessary in order
to make the statements contained in this paragraph or therein not misleading. Since January 1,
1999, there has been no material adverse change in the assets or liabilities or in the business or
condition, financial or otherwise, of Zeros, except as described in Schedule 4(B), or except
as provided below, and to the knowledge of Zeros, no fact or condition exists or is
contemplated or threatened which might cause such a material adverse change in the future.
C. Ownership of the Assets. Zeros has and will have on the Closing Date,
good and marketable title to all of the Assets reflected on Schedule 4(C) attached hereto, or
as set forth in the Financial Statements, free and clear of all liens, judgments or encumbrances
whatsoever, except as to changes made in the ordinary course of business and except those
excluded personal assets of the Shareholders listed on Schedule 4(C). The Xxxx of Sale, to be
delivered herewith, shall transfer all of the Assets free and clear of all liens and
encumbrances.
D. Material Contracts. Set forth in Schedule 4(D), attached hereto, is a list
identifying all material outstanding contracts, agreements, franchise agreements, territorial
agreements, leases, lease guarantees and undertakings to which Zeros is a party or to which
any of its properties are subject, except those referred to in other exhibits delivered pursuant to
this Agreement; Zeros is not in default under any such contract, agreement, lease, or undertaking
and it does not know of any default by any other party thereto, and no contract, agreement,
lease, or undertaking referred to therein or in the exhibits delivered pursuant to this Agreement will be
modified or changed prior to the Closing Date, without the prior written consent of the
Buyer. Except to the extent indicated in Schedule 4(D), no consent or approval of other parties is
required for the Buyer to succeed to such material contracts, agreements, leases, and undertakings
pursuant to the sale of the Assets. Except for the contracts listed in Schedule 4(D) or otherwise
accepted hereunder, Zeros does not have any outstanding agreement or arrangement with distributors,
dealers, or other sales representatives in connection with the distribution of any of its
products; and Zeros will not incur any further obligations or commitments, or make any further
additions to its property or further purchases of equipment, or inventory, unless in the ordinary course
of business or with the written consent of the Buyer.
E. Employment Agreements. Except for the contracts, agreements, or plans
referred to in Schedule 4(E), attached hereto, Zeros does not have any obligation, contingent
or otherwise, under any employment contract, collective bargaining agreement, executive
compensation agreement, pension plan, retirement plan, profit sharing plan, stock purchase
plan, stock option plan, or any other similar agreement or employee benefit plan. Except as set
forth in Schedule 4(E), prior to the Closing Date, Zeros will not, without the prior written consent
of the Buyer, make or agree to make any increase in the rate of wages, salaries, bonuses, or
other remuneration of any of its officers or salaried employees or become a party to any
employment contract or arrangement with any of its officers or employees providing for bonuses, profit
sharing payments, severance pay, or retirement benefits.
F. Tax Audits and Payment of Taxes. Except as set forth in Schedule 4(F),
Zeros has properly completed and filed in correct form all federal, state, sales, workers
compensation, information, and other tax returns of every nature required to be filed by it,
and no extensions of time in which to file any such returns are in effect. Zeros has paid all taxes
(whether or not requiring the filing of returns), including all deficiency assessments,
additions to tax, penalties, and interest of which notice has been received, to the extent that such amounts
have become due. To the extent that tax liabilities have accrued but have not become payable,
such amounts have been adequately reflected as liabilities on the balance sheet as at June 30,
1999.
G. Liabilities. Except as set forth on Schedule 4(G) annexed hereto, Zeros has
no outstanding material claims, liabilities, or indebtedness, fixed, contingent, or otherwise,
except as set forth in the financial information referred to in Section 4(B) above, other than (i)
liabilities incurred in connection with this transaction; and (ii) liabilities incurred in the ordinary course
of business. Zeros is not in default in respect to the terms or conditions of any indebtedness.
H. Restrictive Documents. None of the Shareholders or Zeros is subject to,
or a party to, any charter, bylaw, mortgage, lien, lease, agreement, contract, instrument,
law, rule, regulation, order, judgment, or decree, or any other restriction of any kind or character
which materially and adversely affects the business or financial condition of Zeros, or which
would prevent (i) the consummation of the transactions contemplated by this Agreement; (ii)
compliance by any of them with the terms, conditions, and provisions hereof; or (iii) the
continued operation of the businesses of Zeros after the Closing Date on substantially the same basis as
theretofore operated. The performance of the obligations of the Shareholders and Zeros
under this Agreement do not on the date hereof, and will not hereafter, violate any of the terms or
provisions of any such leases, instruments, agreements, or other documents binding upon the
Shareholders or Zeros.
I. Litigation. Except as disclosed on Schedule 4(I) attached hereto, Zeros is
not engaged in or a party to, or, to the knowledge of Zeros, threatened with, any legal action
or other proceeding before any court or administrative agency.
J. Inventories. All inventories held by Zeros are owned by it, and consist
solely of inventories of the kind and quality regularly used and produced in its business, and
such inventories and in amounts reasonably related to the normal requirements of the business of
Zeros, and will be good and merchantable and fit for the purposes intended.
K. Authorization for Agreement. The execution, delivery, and performance
of this Agreement has been duly and validly approved by the Board of Directors of Zeros
and the shareholders of Zeros. This Agreement is valid and binding on Zeros and its shareholders in
accordance with its terms.
L. No Misleading Statements. The representations and warranties of the
Shareholders and Zeros contained in this Agreement, or any Exhibit, list, or other document
delivered to the Buyer pursuant hereto do not contain any untrue statement of a material fact
or omit to state a material fact necessary in order to make the statements contained therein or
herein not misleading. No information material to this transaction necessary to make any of the
representations and warranties herein contained not misleading has been withheld from, or
has not been disclosed in writing to the Buyer.
M. Brokerage. No brokers, finders or similar agents acting on behalf of the
Shareholders or Zeros are entitled to any brokerage commission, finder's fee or any similar
compensation, in connection with this Agreement or the transactions contemplated by this
Agreement.
N. Holding of Buyer's Common Stock for Investment Purposes Only. Zeros
is acquiring Buyer's Common Stock for its own account, as principal, for investment
purposes only and not with a view toward, or for, subdivision, resale, distribution or fractionalization
thereof in whole or in part, or for the account, in whole or in part, of others, and no other
person has a direct or indirect beneficial interest in such Common Stock, other than by reason of
their ownership of Zeros common stock; further, Zeros will hold the Common Stock as an
investment and has no present intention, agreement or arrangement to divide its participation with others
or to resell, assign, transfer or otherwise dispose of all or any part of the Common Stock
acquired hereby. It is hereby understood that this representation is being given in compliance with
state and federal securities laws.
5. REPRESENTATIONS AND WARRANTIES OF THE BUYER. The Buyer
represents, warrants, and agrees as follows:
A. Existence and Good Standing. The Buyer is duly organized, validly
existing, and in good standing under the laws of the State of Delaware and it has the
requisite corporate power and authority to own property and to conduct business as now being
conducted.
B. Capital Stock of the Buyer. The Buyer has an authorized capitalization
consisting of Fifty Million (50,000,000) shares of common stock, $.001 par value, of which
Four Million Two Hundred Thirty-Seven Thousand Five Hundred (4,237,500) shares are issued
and outstanding as of this date. The Buyer has an additional 1,175,000 shares reserved for
issuance under existing stock options. All of the Buyer's issued and outstanding shares of capital
stock have been duly authorized and validly issued and are fully paid and non-assessable. When
issued in accordance with the terms of this Agreement, the shares of Buyer Common Stock issuable
hereby will be duly authorized and validly issued and fully paid and non-assessable shares of
Buyer Common Stock.
C. Financial Statements and No Material Changes. Schedule 5(C) annexed
hereto sets forth (i) the audited balance sheets of the Buyer as of December 31, 1998, and
statements of operations, changes in stockholders' equity (deficit) and cash flow for the fiscal
year ended December 31, 1998, certified by Xxxxxxxxx Xxxxx & Co., independent certified public
accountants (the "Audited Buyer Financial Statements"). Such Audited Buyer Financial
Statements, including the footnotes thereto, have been prepared in accordance with generally
accepted accounting principles consistently followed throughout the periods indicated. Also
included in Schedule 5(C) are the unaudited financial statements of the Buyer for the nine
months ended September 30, 1999. The balance sheets included in the foregoing financial statements
fairly present the financial condition of the Buyer as of the dates thereof and reflect all
claims against, and all debts and liabilities of the Buyer, whether fixed, contingent, or otherwise, as
of the dates thereof, and such statements of operations fairly present the results of the
operations of the Buyer for the periods indicated. Neither such balance sheets nor such income statements,
including the footnotes thereto, contain any untrue statements of a material fact or omit any
material fact necessary in order to make the statements contained in this paragraph or therein
not misleading. Since September 30, 1999, there has been no material adverse change in the
assets or liabilities or in the business or condition, financial or otherwise, of the Buyer, except in
the ordinary course of business, and to the Buyer's knowledge, no fact or condition exists or is
contemplated or threatened which might cause such a material adverse change in the future.
D. Restrictive Documents. The Buyer is not subject to, or a party to, any
charter, bylaw, mortgage, lien, lease, agreement, contract, instrument, law, rule, regulation,
order, judgment, or decree, or any other restriction of any kind or character which materially
and adversely affects the business or condition of the Buyer, or which would prevent (i) the
consummation of the transactions contemplated by this Agreement; (ii) compliance by it with
the terms, conditions, and provisions hereof; or (iii) the continued operation of the business of
the Buyer after the Closing Date on substantially the same basis as theretofore operated. The
performance of the obligations of the Buyer under this Agreement does not on the date
hereof, and will not hereafter, violate any of the terms or provisions of any such leases, instruments,
agreements, or other documents of the Buyer.
E. Litigation. Except as disclosed on Schedule 5(E) attached hereto, the Buyer
is not engaged in or a party to, or, to the knowledge of the Buyer, threatened with, any legal
action or other proceeding before any court or administrative agency.
F. Authorization for Agreement. The execution, delivery, and performance
of this Agreement has been duly and validly approved by the Board of Directors of the
Buyer. No authorization of the stockholders of the Buyer is required to consummate the transactions
contemplated by this Agreement. This Agreement is valid and binding on the Buyer in
accordance with its terms.
G. No Misleading Statements. The representations of the Buyer in this
Agreement, or any Exhibit, Schedule, list, or other document delivered by the Buyer
pursuant hereto do not contain any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements contained therein or herein not misleading. No
information material to this transaction necessary to make any of the representations and
warranties herein contained not misleading has been withheld from, or has not been disclosed
in writing to Zeros.
H. Brokerage. No brokers, finders or similar agents acting on behalf of the
Buyer are entitled to any brokerage commission, finder's fee or any similar compensation, in
connection with this Agreement or the transactions contemplated by this Agreement.
I. Bankruptcy. Buyer is not, and has not within the past six months been, the
subject of a bankruptcy or insolvency proceeding, nor is Buyer subject to any lien that might
adversely affect Buyer's ability to perform its obligations as contemplated by this Agreement.
6. FURTHER AGREEMENTS OF THE PARTIES. The Shareholders, Zeros, and
Buyer further covenant and agree as follows:
A. Consent to Assignment. The Shareholders and Zeros each agree that with
respect to any contracts and agreements which may not be assignable pursuant to the sale of
the Assets, including but not limited to, any leases held in their names which are subleased to
franchisees or otherwise used in connection with the business of Zeros, they will use their
collective best efforts to obtain from the other parties thereto either consents to the
assignment thereof or new contracts running to the Buyer, containing substantially the same terms and
conditions. To the extent, despite such best efforts, that any such contract is not so assigned,
the Buyer shall, from and after the Closing Date, perform all of the obligations under such
contract and agreement in the name of Zeros and shall be entitled to all of the privileges and benefits
of such contract and agreement; provided, that the Buyer shall indemnify, defend and hold
harmless the Shareholders from and against any personal liability, cost or expenses which may arise
under any such contract or agreement, but only to the extent of actions taken or omitted to be taken
by the Buyer from and after the Closing Date.
B. Indemnification.
(i) By Zeros and the Shareholders. Zeros and the Shareholders hereby
jointly and severally agree to indemnify, defend and hold harmless the Buyer, from and
against any and all liabilities and losses, including, without limitation, interest, penalties and
reasonable attorneys' fees and disbursements, from and against: (a) any and all liabilities of the
Shareholders and Zeros arising by virtue of the operation of Zeros prior to the Closing Date and not
disclosed to the Buyer prior to the Closing Date, including but not limited to, any and all liabilities
arising by virtue of failure of Zeros or the Shareholders to fully comply with all federal and state
laws and regulations; (b) any material inaccuracy of any representation or any breach of any warranty,
covenant or agreement of Zeros or the Shareholders contained in this Agreement or in any
document, certificate or agreement of the Shareholders or Zeros delivered pursuant to this
Agreement and (c) any and all liabilities arising by virtue of failure of Zeros or the
Shareholders to fully comply with all federal and state laws and regulations with respect to the transactions
contemplated by this Agreement.
(ii) By the Buyer. The Buyer agrees to indemnify, defend and hold
harmless the Shareholders and Zeros from and against any and all liabilities and losses,
including, without limitation, interest, penalties and reasonable attorneys' fees and disbursements,
arising out of due to or otherwise in respect of any inaccuracy of any representation or any breach of
any warranty, covenant or agreement of the Buyer contained in this Agreement or in any
document, certificate or agreement delivered thereby pursuant hereto.
(iii) Claims for Indemnity. Whenever a claim shall arise for which any
party shall be entitled to indemnification hereunder, the indemnified party shall notify the
indemnifying party in writing within thirty (30) days after the earlier of (A) the indemnified
party's first receipt of notice of, or (B) the indemnified party's obtaining actual knowledge
of, such claim, and in any event within such shorter period as may be necessary for the
indemnifying party or parties to take appropriate action to resist such claim. Such notice shall specify all
facts known to the indemnified party giving rise to such indemnity rights and shall estimate (to the
extent reasonably possible) the amount of potential liability arising therefrom.
(iv) Right to Defend. The indemnifying party shall have the right, at its
own expense and by its own counsel, to undertake to compromise, settle or defend any such
matter involving the asserted liability of the party seeking such indemnification. If any
indemnifying party shall undertake to compromise, settle or defend any such asserted liability, it shall
within seven (7) days notify the indemnified party of its intention to do so. In any event, the
indemnified party shall have the right, at its own expense, to participate in the defense of such asserted
liability. If the indemnifying party shall fail to compromise, settle or defend any such
asserted liability within a reasonable time after notice, the indemnified party shall have the right, but
not the obligation, to undertake the compromise, settlement or defense thereof on behalf of, for
the account of, and at the risk of the indemnifying party.
C. Expenses. The Buyer and Zeros shall each pay all of their respective legal
fees and any accounting or other expenses in connection with the transactions contemplated
by this Agreement.
D. Bulk Sales. Each of Zeros and Buyer hereby waive compliance with the
applicable provisions of the Uniform Commercial Code, Article 6 (Bulk Sales), as adopted in
the States of Virginia and North Carolina as such provisions shall apply to the transactions
contemplated by this Agreement.
E. Registration Rights. Buyer hereby grants Zeros "piggyback" registration
rights with any public offering of the Buyer's securities. Upon effectiveness of such an
offering, Zeros will be able to sell or transfer its shares of Buyer's Common Stock, on a pro rata
basis, into the public offering, subject to approval of the underwriter of such offering. In the event
that Buyer has not filed a registration statement with the SEC within nine (9) months from the
date hereof, Zeros will have the one-time right to compel the Company to prepare and file with
the SEC a registration statement to permit the public offering of its shares of Buyer's Common
Stock.
F. Change of Corporate Name. Seller hereby agrees the change its corporate
name with the State of Virginia to "Zero's Mr. Submarine of Virginia" or such other name
as agreed to with Buyer, within ninety (90) days hereof.
7. CONDITIONS TO OBLIGATIONS OF THE BUYER. The obligations of the
Buyer to cause the sale of the Assets to become effective are subject to the satisfaction on or
prior to the Closing Date of the following conditions, each of which may be waived in writing by
the Buyer:
A. Corporate Action. The Shareholders and Zeros shall have furnished Buyer
with (i) certified copies of resolutions, duly adopted by the holders of all outstanding shares
of Zeros Common Stock approving this Agreement, and authorizing the transactions provided
for herein in accordance with the terms hereof; (ii) certified copies of resolutions duly adopted
by the Board of Directors of Zeros, to the same effect and (iii) certificates executed by the
Shareholders and Zeros to the effect that: (x) the Shareholders and Zeros have full power and authority to
make, execute, deliver, and perform this Agreement; (y) such Agreement has been duly authorized
and approved by proper action of Zeros; (z) this Agreement constitutes valid and legally binding
obligations of the Shareholders and Zeros (as relevant) in accordance with its terms; (aa) all
actions and proceedings required by law, this Agreement, or required to be taken by the
Shareholders and Zeros and Zeros's Board of Directors at or prior to the Closing Date in
order to make the sale of the Assets effective (as relevant), have been duly and validly taken; and
(bb) the consummation of this Agreement will not result in a breach of the Certificate of
Incorporation or the Bylaws of Zeros, or a default under the terms of any material agreements, leases or
other obligations to which Zeros or any of the Shareholders is a party.
B. Charter Documents and Good Standing Certificates. The Buyer shall
have received: (i) a copy of the Certificate of Incorporation of Zeros, certified by the
Virginia Corporations Department and (ii) a good standing certificate from the Virginia and North
Carolina Secretaries of State, to the effect that Zeros is in good standing in such states.
C. Truth of Representations, Warranties and Schedules. The
representations and warranties of the Shareholders and Zeros contained in this Agreement
and all schedules, exhibits, instruments, agreements, or other documents that may have been
delivered to the Buyer pursuant to this Agreement, shall be true and correct in all material respects on
and as of the Closing Date with the same effect as those such representations and warranties had
been made on and as of such date, or such schedules and instruments had been delivered on such
date, and the Buyer shall have received on the Closing Date a certificate to that effect, dated the
Closing Date and executed by the Shareholders and by the President or Vice President of Zeros.
D. Performance of Agreements. Each and all of the agreements of the
Shareholders and Zeros to be performed on or before the Closing Date pursuant to the terms
hereof shall have been substantially performed, and the Buyer shall have received on the
Closing Date a certificate to that effect executed by the Shareholders and by the President of Zeros.
E. Non-Competition Agreements. On the Closing Date, each of the
Shareholders shall have executed and delivered to the Buyer a non-competition agreement in
substantially the form of Exhibit A annexed hereto and made a part hereof (the
"Non-Competition Agreement").
F. Assignment Agreement. On the Closing Date, Zeros shall enter into an
assignment agreement with Buyer, substantially in the form of Exhibit B annexed hereto and
made a part hereof (the "Assignment Agreement").
G. Xxxx of Sale. On the Closing Date, Zeros shall enter into an xxxx of sale with
Buyer, substantially in the form of Exhibit C annexed hereto and made a part hereof (the
"Xxxx of Sale").
8. CONDITIONS TO OBLIGATIONS OF THE SHAREHOLDERS AND ZEROS.
The obligations of the Shareholders and Zeros to cause the sale of the Assets to become
effective are subject to the satisfaction on or prior to the Closing Date of the following conditions of
this Section 8, any one or more of which may be waived in writing by the Shareholders:
A. Corporate Action. Buyer shall have furnished certified copies of
resolutions duly adopted by the Board of Directors of the Buyer, approving this Agreement
and authorizing the transaction provided for herein in accordance with the terms hereof.
B. Good Standing Certificate. The Shareholders and Zeros shall have
received: (i) a copy of the Certificate of Incorporation of the Buyer, certified by the
Delaware Secretary of State and (ii) a good standing certificate from the Delaware Secretary of State to
the effect that the Buyer is in good standing.
C. Truth of Representations, Warranties and Schedules. The
representations and warranties of the Buyer contained in this Agreement and all schedules,
exhibits, instruments, agreements, or other documents that have been delivered to the
Shareholders and Zeros pursuant to this Agreement, shall be true and correct in all material respects on
and as of the Closing Date with the same effect as though such representations and warranties have
been made on and as of such date or such schedules and instruments have been delivered on such
date and the Shareholders and Zeros shall have received on the Closing Date a certificate to that
effect, dated the Closing Date and executed by the President of the Buyer.
D. Performance of Agreements. Each and all of the agreements of the Buyer
to be performed on or before the Closing Date pursuant to the terms hereof, shall have been
substantially performed, and the Shareholders and Zeros shall have received on the Closing
Date a certificate to the effect and executed by the President of the Buyer.
9. CONDITIONS SUBSEQUENT.
A. Landlord Consents. Within sixty (60) days of the Closing Date, Zeros
shall have delivered to Buyer consents of all landlords in connection with all Leased Real
Estate and Leased Assets being transferred hereunder. In the event that Zeros or the applicable
party is unable to assign any Leased Real Estate or Leased Assets to Buyer, then Zeros or the
applicable party shall continue as tenant under such lease and shall fully perform all of its duties and
obligations under such lease for the remaining term of such lease, including any extensions
thereof. Buyer agrees to reimburse Zeros or the applicable party for all rent payments made
under such lease.
B. Franchise Estoppel Certificates. Within sixty (60) days of the Closing
Date, Zeros shall have received Franchise Estoppel Certificates from at least a majority of
the Franchisees listed on Schedule 9(B) annexed hereto, unless waived in writing by Buyer in its
sole discretion.
10. MISCELLANEOUS.
A. Notices. Except as herein provided, any notice, request, demand or other
communication required or permitted under this Agreement shall be in writing and shall be
deemed to have been given when delivered by overnight courier, or three (3) days after having been
mailed by certified mail, return receipt requested, addressed to a party as follows:
If to Zeros or the Shareholders:
Zeros Mr. Submarine, Inc.
0000 Xxxxxxx Xxxxxx
Xxxxxxxx Xxxxx, XX 00000
And if to the Buyer:
American Kiosk Corporation
0000 XXX Xxxxxxxxx, Xxxxx 000
Xxxx Xxxxx Xxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxxx, President
with a copy to its counsel:
Xxxxxxx & Xxxxxxxxxx, LLP
0000 Xxxxxxxxxxx Xxxxxx
Xxxxxxxx, Xxx Xxxx 00000
Attn: H. Xxxxx Xxxxxxx, Xx., Esq.
or such other address as shall be furnished in writing by the parties, and such notice or
communication shall be deemed to have been given as of the date so mailed.
B. Parties in Interest. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and there respective successors and assigns.
C. Entire Agreement. It is understood and agreed that all understandings and
agreements heretofore had between the parties hereto, are superseded in their entirety and are
merged into this Agreement, which, together with the Exhibits and Schedules hereto, fully
and completely express the parties' agreement.
D. Counterparts. This Agreement may be executed in one or more
counterparts, all of which taken together shall constitute one instrument.
E. Governing Law. This Agreement shall be governed by the laws of the State
of Florida.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the date and year first above written.
AMERICAN KIOSK CORPORATION
By:S/S XXXXXXX X. XXXXXXX
Xxxxxxx X. Xxxxxxx, President
ZEROS MR. SUBMARINE, INC.
By:S/S XXXX X. XXXXXXX
Xxxx X. Xxxxxxx, Chairman
S/S XXXX X. XXXXXXX
XXXX X. XXXXXXX
S/S XXXXXX XXXXXXXX
XXXXXX XXXXXXXX
S/S XXXX XXXXXXX
XXXX XXXXXXX
